Summer Travel Boosts Anc Results

July 27, 2000|By TOM STIEGHORST Business Writer

ANC Rental Corp. caught a favorable tide in its launch as an independent company as strong demand for summer travel helped it post a 12.3 percent increase in after-tax income for the second quarter ended June 30.

The Fort Lauderdale firm, which rents cars under the National, Alamo and Car Temps brands, was spun off from AutoNation Inc. on June 30.

Last year, the units of AutoNation that became ANC Rental lost $71 million on revenue of $3.5 billion.

ANC President Michael S. Karsner credited a mix of better pricing, cost controls and higher use of the company's fleet of 340,000 vehicles for the improvement. "We are pleased with our performance in this, our first quarter reporting as a public company," he said.

Karsner said ANC was able to raise prices 3.8 percent during the quarter for Alamo and National, its two major brands. Analysts said those increases should continue into the third quarter as travel remains strong.

ANC's operating results were better than its net income. It said profits were reduced by an $8.3 million pre-tax charge for non-recurring transition costs incurred in the consolidation of its headquarters in Fort Lauderdale.

Absent the one-time charge, it said pre-tax earnings were $39.3 million, up 54.1 percent from $25.5 million a year earlier. Revenues in the second quarter were up 2 percent to $910.6 million compared to $892.7 million.

Along with Hertz Corp. and Avis Group Holdings Inc., ANC is one of the top rental car companies in the world. It is the only one to combine business, leisure and insurance-rental brands under one roof.

The National brand is being repositioned as somewhat less price sensitive, a change that accounted for a slight shrinkage in the volume of cars rented in the quarter. Prices were up 5.2 percent but volume fell 3.7 percent, said Karen Beard, ANC's president for North America.

At Alamo, the leisure brand, about 12 percent revenue came from business booked over the Internet, mostly from the brand's Web site, www.alamo.com.

Karsner said recent price increases by competitors bode well for future results. "We believe that given the strong demand that exists, there is room for further rated improvements going forward," he said.

ANC shares closed at $7.53, up 34 cents on the New York Stock Exchange.

Tom Stieghorst can be reached at 954-356-4658 or on the Internet at tstieghorst@sun-sentinel.com.